The Wages of Destruction

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The Wages of Destruction: The Making and Breaking of the Nazi Economy

First edition cover
Written by:	Adam Tooze
Central Theme:
Synopsis:
Genre(s):	Nonfiction, Economics
First published:	June 29, 2006

The Wages of Destruction: The Making and Breaking of the Nazi Economy is a book of historical non-fiction about the economical history of Nazi Germany by Adam Tooze. Starting after World War I, he traces the economic history of of Germany from the potentially different path the Weimar Republic pursued and then the Nazi government's economic policy until the end of 1945's ignominious end of World War II. Unlike many other histories, in which economics were subsumed into discussions of broader topics such the politics of the Nazi state, this book remains almost entirely focused on the economic aspects of the Nazi regime, with all other subjects secondary.

The book is in some ways a rebuttal of many claims both the Germans and the world believed as to the state of the Nazi economy both before and during the WWII years, with Tooze's analysis striving to separate economic fact from fiction as objectively as possible.

Tropes used in The Wages of Destruction include:

• All There in the Manual: Both Mein Kampf and the "Second Book" (the follow-up to Mein Kampf) are extensively referenced for Hitler's specific economics-related statements.
• Attack Its Weak Point: As Allied bombers kept hitting the Ruhr Valley, it crippled many resources critical to all of the German war industry and even civilian needs by a considerable margin, despite attempts to mitigate the damage.
• Bad Boss: Hitler. He was prone to making demands on industry for quotas that at times exceeded the global capacity of the entire world and would not take no for an answer. Those who insisted on saying no risked everything from their careers to their personal safety, especially in the later years of the Nazi regime.
• Bait and Switch: As Tooze explains, a common myth was the Nazis wanted to sponsor job creation programs for workers. The reality was that such had been considered and discredited under the Weimar regime as well as the Nazis. When they finally were enacted, their true purpose was to jump-start their military industry, which was sold to outside observers as an attempt to employ more labor than was unemployed.
• Brutal Honesty: Walther Darre, as early as 1936, had this to say about how Germany (in his role as the German agricultural ministry leader) could solve its agrarian issues, which was a pretty clear statement of intent prior to 1939:

The natural area for settlement by the German people is the territory to the east of the Reich’s boundaries up to the Urals, bordered in the south by the Caucasus, Caspian Sea, Black Sea and the watershed which divides the Mediterranean basin from the Baltic and the North Sea. We will settle this space, according to the law that a superior people always has the right to conquer and to own the land of an inferior people.

• Hitler had a moment of this as well - while he generally avoided making concrete comments on the state of the war, in 1942, while discussing the need for coking coal for the steel industry with Paul Pleiger, he was uncharacteristically direct and to the point:

Herr Pleiger, if, due to the shortage of coking coal the output of the steel industry cannot be raised as planned, then the war is lost.

• Can't Catch Up: Due to the backward agricultural sector of the German economy, under their existing system and due to the limited amount of arable land available to German farmers, they were doomed to this trope. Hitler's war plans were intended explicitly to remedy this.
  • Because of the conscious decisions of Nazi ideology, the possibility of the German economy becoming anything other than an outlaw nation scheming to make up for its shortfalls via conquest was this. Tooze notes that by shunning foreign credit and their obsession with autarky the Nazis guaranteed the Germans would have little enough extra capital to raise the standard of living of the average German or promote enough trade to make prices go down enough to make many items considered luxuries become competitive enough to be affordable to most standard workers.
• Conspicuous Consumption: Defied. One would think, even if you didn't know Hitler was planning for another war, that the rearmament was just a way for Germany to flex its industrial strength in some ways, but this excerpt from a tank manual that Tooze quotes makes it very clear the Germans were acutely aware of the money that went into the arms they built:

For every shell you fire, your father has paid 100 Reichsmarks in taxes, your mother has worked for a week in the factory . . . The Tiger costs all told 800,000 Reichsmarks and 300,000 hours of labour. Thirty thousand people had to give an entire week’s wages, 6,000 people worked for a week so that you can have a Tiger. Men of the Tiger, they all work for you. Think what you have in your hands!

• David Versus Goliath: Tooze uses the United States to draw a line of comparison between the economic strength of Germany from 1870-1945 to its American counterpart, noting they started out with the US at a slight disadvantage, but otherwise the US was definitely the economic goliath.
• Deal with the Devil: The alliance between the Nazis and big business happened this way. Hitler essentially offered them absolute domestic control of the industries they had been dreaming about since the early 1920s, and they had to support his regime in return. They took this deal, with the full knowledge it came with the rider of establishing a huge slush fund for the Nazis to use however they saw fit and that the Nazis held the whip hand in making sure they could not back out of the deal later.
  • Himmler used a variant of this logic to make sure the Gauleiter (regional leadership) did not consider welshing on helping the German war effort. He essentially reminded them in 1943 they were all parties to the Final Solution already, and that the blood was already on their hands, they had nothing to gain by trying to quit, and everything to lose, as they had already made their deal with the devil.
• Deconstruction: Tooze deconstructs a lot of commonly held myths about the German economy, including Albert Speer's supposed "economic miracle" and the difference between what Germany produced during the Nazi period versus what it actually needed to produce and how the difference was much more profound than earlier histories indicated, often by a severe degree.
• Desperation Attack: Economically, Hitler had no choice but to go to war in 1939; the German economy was either going to implode or he could bank on conquest relieving the financial strain by seizure of foreign assets. He got lucky with Poland and France to the point that the German economy wasn't hovering deep in the red for another few years at least.
• Divide and Conquer: Germany managed to welsh on its war debt repayment thanks to this trope. When the Nazis fully welshed on the German debt repayment, the fact this left their European and American creditors (who had little leverage on Germany since they too had no money to encourage bilateral debt repayment) high and dry worked against the creditors, since they all needed to work in unison to put pressure on Germany, but their own desperate situations did not encourage them to do so, allowing the Nazi regime to walk away with little consequence and their creditors wound up the biggest losers.
  • The Nazi regime achieved a similar use of this trope in seeking South American markets to replace the markets of the United States. It essentially scotched any attempt to cut Germany off at the ankles and the favorable terms encouraged places like Brazil to stiff the US with little consequence. End result was German markets free of a lot of US dependency and the US market position splintered on the Southern American front.
• Driven to Suicide: Quite a few people wound up killing themselves when they realized the writing on the wall over how they were given impossible logistic demands to make on Hitler's orders.
• Dying Like Animals: Hans Frank, when discussing the allocation of labor in Germany involving Poles and Jews, invoked this sentiment as to why he did not care about their ability to thrive past what Germany needed them for:

I am not interested in the Jews. Whether or not they get any fodder to eat [fuettern] is the last thing I’m concerned about . . . The second category is made up of the Poles [perhaps as many as 10 million people] in so far as I can make use of them. I shall feed these Poles with what is left over and what we can spare. Otherwise, I will tell the Poles to look after themselves . . . I am only interested in the Poles in so far as I see in them a reservoir of labour, but not to the extent that I feel it is a governmental responsibility to give them a guarantee that they will get a specific amount to eat. We are not talking of rations for Poles but only of the possibilities of feeding them.

• Even Evil Has Standards: Goering, while avidly supporting the persecution of Jews and the seizure of their assets, was nonetheless incensed at the property damage. As he put it:

I have had enough of these demonstrations! They don’t harm the Jew, but me, who am the last authority for coordinating the German economy.

• Exactly What It Says on the Tin: The Hunger Plan. This was a plan by the Reich Ministry for Food and Wehrmacht economists to deliberately starve over 30 million Soviets to death in order to free up food for German use, spelled out in very exact terms and with that name on the plan itself in 1941.
• Fascist but Inefficient: This was noted as a recurring issue. Just because Hitler ran a state that gave him nigh absolute power did not translate into making any issues he faced in terms of resource allocation magically disappear. If anything, the biggest weakness of the Nazi regime was that when the economic system had problems, they nigh always had a physical problem that could not wish away by simple ideology. Tooze does, however, concede that the nigh absolute power Hitler and his cronies exhibited did give them great latitude for assigning resources at will, but even this was limited by what they had available at the time.
• For Want of a Nail: While Tooze is careful to avoid generalizations, for the most part, one of his big assertions is that Germany might have never taken Hitler seriously had the Depression not made him look like a prophet.
• Greedy Jew: Tooze makes perfectly clear if you want to have a starting point to understand the Nazis in terms of economics, you must acknowledge they took this trope in absolute seriousness and patterned all their assumptions after it, no matter how true it actually was.
• Insane Troll Logic: The Nazi ideology outright prevented Germany from making any pragmatic changes to economic policy that would have been beneficial if it in any way conflicted with Hitler's preconceptions about the Jews. Due to Hitler's belief the United States was a key focus of the "Jewish conspiracy", any attempt at any form of modus vivendi in either the peacetime or war years was utterly off the table, even though all the proof of Hitler's contentions existed nowhere outside his own mind. Tooze even lays out evidence Hitler's beliefs were formulated very early based on the Weimar Republic years and were set in stone by the 1930s, which made this trope the prevailing condition of his regime.
  • Part of the basis of all Hitler's economic logic that would follow was his contention the economic loans provided by the United States to assist in the reparations system set up after the Treaty of Versailles was little more than a Jewish banker-sponsored plot to make sure Germany paid up and the Weimar officials who went along with it were the same ones who sold out the Germans and thus Germany needed to severe any economic dependence on that system. This resulted in Germany being denied otherwise viable sources of foreign capital that it could have used but was not considered at all under Nazi policy.
• Irony: Hitler and the creed of the Nazis heavily promoted the dignity and importance of the German farmer and the agrarian sector of the economy as the backbone of the German state. However, achieving the goal of keeping most of the other economic functions going generally required the functional equivalent of kicking German farmers to the bottom of the priority pile, especially due to the fact Hitler was absolutely adamant about remilitarizing and that became the tail that wagged the rest of the economic dog of the German economy, often resulting in grave disadvantage to the agrarian sector anyway.
• It Got Worse: Economically, the fate of Germany was sealed as soon as the pipeline of regular American funding and European loans went belly-up. After that, this trope was in full effect and directly contributed to Hitler's rise to power.
  • For Hitler, the war went from barely manageable to basically lost when the United States joined in, something he even was willing to admit was the likely case prior.
• Magnificent Bastard: Hjalmar Schacht. During the 1930s, he found a deviously clever way to secure export capital without devaluing the German Reichsmark via direct policy. As Tooze explains:

The problem that now posed itself with ever greater urgency, however, was how to sustain German exports without a devaluation. A solution was found in the autumn of 1933 through a variety of schemes, all of which made use of the advantage that Germany had gained through the oratorium on its foreign debts. Either through a complicated system of buy-backs, or through manipulating the blocked accounts of the foreign creditors in Germany, the Reichsbank found ways of subsidizing Germany’s exporters at the expense of its creditors, earning Hjalmar Schacht his dubious reputation in the 1930s as the dark wizard of international finance.

• The Man Behind The Man: Hitler was convinced, in an economic sense, the United States fit this goal, and Tooze notes, to a considerable extent, given the US did prop up the European economy, Hitler had a point insofar as their economic influence in securing markets went. Tooze does note Hitler went off into Conspiracy Theorist territory when he injected anti-Semitism into this logic, but he wasn't entirely wrong either.
• Obstructive Bureaucracy: The Nazis loved this trope to the point the economy became so tied up in red tape they were the only ones who could make sense of it. While it bought limited stability during the peacetime years after some initial confusion, it all disintegrated later in the war because the resource squeeze left too many bureaucrats with too few resources to keep the economy moving.
• Only Sane Man: Hjalmar Schacht was an early supporter of Hitler's economic policies when they remained remotely reasonable, although he never joined the Nazi Party. His first major break with cooperation, which led to his eventual sacking, was in 1936 when Germany shifted to requiring far more resources than he knew was financially feasible, leading him to make this ignored plea for sanity:

You expect from me that I should procure the necessary foreign exchange for your needs. I must respond that under current conditions I can see no possibility of doing so . . . if the demand is now . . . for increased rearmament, it is of course far from my mind to modify the support I have given for years to the greatest possible rearmament, both before and after the seizure of power. It is my duty, however, to point out the economic limits that constrain any such policy.

• • Carl Goerdeler, who had been commissioned to evaluate the current situation of Germany circa 1936 in regards to international markets, rather bravely wrote an honest report effectively pointing out the dangers of continued Nazi-led subsidy that dumped exports on the world market and even advocated reaching a modus vivendi on many issues the Nazis would have consider verboten, such as military rebuilding and anti-Semitic policies. Given he would become part of the later resistance that tried to kill Hitler in 1944, this was an early bold step that put him in grave danger even then.
  • Schwerin von Krosigk and Ludwig Beck had a brief moment of success in their roles as Reich Finance Minister and Chief of Staff. In 1938, Germany was simply not ready for a war and both men knew it, and while Hitler only backed down reluctantly at the last minute, both manage to stall for enough time to get him to reconsider for military and economic reasons. By the next year neither was in a position to do the same again, and Hitler was not taking no for an answer then.
  • Hans Kehrl of the Armaments Ministry might have been a diehard Nazi, but even he realized Germany was screwed and tried to convince Albert Speer as much in 1943, only to have his pleas fall on deaf ears. As for Speer himself, it was more ambiguous. He was willing to admit things were bad post-1943, but was also the lone optimist keeping Hitler's wishes going despite all pessimism otherwise from anyone else.
• Paper Tiger: In many ways, the Nazis had economic issues so vast they were downright laughable, which they were only partially able to conceal at best, but this concealment failed almost completely post-1943, revealing their economy to be even more pathetic than towards the end of WWI.
• Plausible Deniability: Discussed and ultimately mocked. While even back in the Weimar Republic Germany always wanted to rearm in direct defiance of the Versailles Treaty, the economic side was initially well hidden and the scale of the plans was fairly modest to invoke this trope. By the time of Nazi Germany, they quit trying to even pretend this trope was in effect, and by 1934 an imbecile could tell exactly what they were doing, pathetically weak denials to the contrary.
  • Tooze notes Albert Speer got as light a sentence as he did at Nuremberg because he combined the use of this trope with the fact the records that could have much more deeply implicated him in Nazi atrocities were, at the time of the Nuremberg trials, not very easy to find. This allowed Speer to play the cooperative one and receive a rather merciful sentence. It's also obvious Tooze holds Speer in a fair bit of contempt and he finds every chance the book affords to provide receipts spiking Speer's own official record of events to correct what he considers Speer's whitewash of what he actually did swallowed by earlier historians.
• Poor Man's Substitute: One thing the Nazis tried to do to ensure autarky was to make synthetic fuel oil and steel, often using very inferior grades of coal and iron ore. As Tooze notes, it wasn't entirely ludicrous on its face. It was feasible, it was just a long-term investment that secured little to no immediate gain where they needed it most at the time the crash programs for both were implemented.
• Reality Ensues: This trope kneecapped a lot of what the Nazis wanted to do because they were often trying to secure much more resources than they could on a shoestring budget, and the result of this was an obvious deficit of actual return for investment in industry, jobs, and general long-term solvency.
  • Hitler wanted Germany to have as little economic obligation to foreign markets as possible. He got his wish, and that included the natural circumstance that since he effectively declared Germany a faithless debtor, even if absolute desperation demanded they play nice even temporarily for foreign capital to prop up the domestic currency reserve, Hitler had doomed Germany to being stiffed by creditors who saw Germany as a terrible risk as a natural consequence.
  • The Reichsmark as a tool of foreign exchange was hobbled out the gate because, unlike many other countries that removed their currency from backing on gold, Germany refused to let their currency float for fear it would further devalue it on the world market. This was not an inaccurate assessment, but it had the natural consequence of jacking up the price of trading the German mark (or not allowing the price to fluctuate, which had the same effect) for any other currency to the point it was a popular as a plague rat on the world market.
• Right for the Wrong Reasons: When Hitler's Jew paranoia was stripped away, Tooze notes Hitler did have many salient and relevant observations about the economy, albeit even this was through a heavily slanted lens aimed at Hitler's specific long-term objectives.
• Pyrrhic Victory: The Nazi regime initially wanted to encourage Jewish emigration and did just that early on. Unfortunately, economics made the victory a pointless one. To secure a visa for a foreign nation, the Jews who left had to be allowed to leave with enough hard currency to purchase one, which directly contributed to a massive drain on the Reichsmark reserves of the German banks, which they could not afford since during the period of 1933-34 especially, they were teetering on utter bankruptcy, so the victory was not only hollow, it even became a bigger problem than the solution by ultimately reducing emigration.
  • Conquest was not the cure-all for German resource issues, simply because to make good use of the conquered areas, they were forced to divert resources to manage them alongside Germany. Long-term, excellent management could have paid dividends, but they wanted results immediately and were forced into drastic measures to achieve something remotely equally economic parity.
• Sadistic Choice: The Germany economy in the 1930s constantly hovered between one. Either scrap rearmament and provide more for the consumer sector or keep rearmament going and bank on conquest filling in the blanks of the consumer economy and risk the utter collapse of the standards of living prior.
• Social Darwinism: Hitler utterly believed in this in regard to economics. Tooze sums it up rather nicely with:

As we have seen, the doctrine of economic life as a field of struggle was already fully formed in Mein Kampf and Hitler’s ‘Second Book’. And this Darwinian outlook was only encouraged by the subsequent Depression. Given the density of Germany’s population and Hitler’s insistence on the inevitability of conflict arising from export-led growth, the conquest of new Lebensraum was certainly one means of raising Germany’s per capita income level. Hitler could hardly have been more emphatic or consistent in his advocacy of this position. As we have seen, he made a point of reiterating this belief in the very first days of his new government in 1933. An aggressive foreign policy based on military strength was the only real foundation of economic prosperity.

• • To manage the rations for prisoners forced to do work, the Nazis relied on a very brutal program based on this trope that became their nationwide practice throughout the Reich:

Bonuses of various kinds were widely used by German employers. But Guenther Falkenhahn, the Generaldirektor of the Plessschen Werke, a mine that supplied IG Farben’s Silesian chemicals complex, took bonuses to a new, existential level. Under a system he dubbed Leistungsernaehrung, or ‘performance feeding’, he divided his Ostarbeiter into three classes. Only those achieving an adequate, average performance would receive the normal ration. Those underperforming would have deductions made from their rations. These deductions would then serve as bonuses for the above-average performers. The system was designed to manage scarcity. It implied no overall increase in the food ration. It simply rewarded the strong at the expense of the weak.

• Stealing From the Till: The Nazi regime found a quasi-legal way to do so from their own citizens for most of the war. By freezing the civilian sector goods production while uncapping the wartime production caps, they encouraged people with cash that they could not spend to place it back in the banks and savings loans financed by the Reich itself. This kept the wartime production account pretty far into the black by using the excess funding consumers could not spend as their own personal slush fund.
• Sunk Cost Fallacy: In spades, both for the German economy under Hitler and the subsequent war in particular.
• Too Clever by Half: Not long after Hitler took power, he sought to remove the economic shackles that bound Germany to the American and European markets. It succeeded, which was essential to preventing what he considered an economic straitjacket that would otherwise apply later on where those parties could squeeze Germany dry. However, it succeeded a bit too well, as it made Germany an outlaw nation in terms of financial credit, cutting off several sources of funding that otherwise could have bolstered the economy later, and still left late 1930s Germany in an economically regressed state in the long-term despite outwards signs of growth. The second item would be a chicken coming home to roost later in the WWII period, as Germany found itself even more destitute than it was after WWI.
• Urban Legends: The "autobahns" were commonly assumed to be a massive success and an active part of the Nazi regime's internal construction. As Tooze points out, it proved to be of negligible importance due to funding and labor issues, despite a bunch of early noise and hoopla given the program, though said propaganda was effective enough to make the trope a reality anyway.
  • Tooze spends a fair amount of time deconstructing one that was built up concerning how Albert Speer was credited with keeping the Nazi economy going in the later half of the war. He does note the substance of the myth wasn't, by itself, lies, as Speer did wield great influence over the economy and did implement actual measures to reform the economic system, but most of what actually applied to the practical implementation was firmly in the realm of this trope, as Tooze explains in exhaustive detail.
• What Could Have Been: Tooze notes that Hitler might have never risen to power had the circumstances of 1918-1933 turned out much different. In fact, as he summarizes it:

One of the many extraordinary features of German politics in the aftermath of World War I is that throughout the existence of the Weimar Republic the German electorate faced a choice between a politics centred on the peaceful pursuit of national prosperity and a militant nationalism that more or less openly demanded a resumption of hostilities with France, Britain and the United States. Since most of this book will be taken up with a dissection of the way in which Hitler harnessed the German economy in pursuit of this latter option, it seems important to begin by clearly establishing the alternative against which his vision was framed and how that alternative was pushed out of view by the disastrous events leading up to Hitler’s seizure of power.